Litigation Release No. 21812 / January 13, 2011

On January 13, 2011, the Securities and Exchange Commission filed a civil action in the United States District Court for the Eastern District of New York against Warren D. Nadel, his broker-dealer, Warren D. Nadel & Co. (“WDNC”), and his investment advisory firm, Registered Investment Advisers, LLC (“RIA”). The Commission alleges that these Defendants fraudulently induced clients to invest tens of millions of dollars in a purported investment program in order to receive over $8 million in commissions and fees from 2007 through 2009. Defendants deliberately overstated the value and liquidity of client holdings in the Strategy, by misrepresenting and concealing critical information about the way they were supposedly executing it. Although Defendants informed clients repeatedly that they were executing open-market transactions on the clients’ behalf, the vast majority of transactions, however, were not executed on the open market. Most simply consisted of trades between advisory client accounts controlled by Defendants at inflated prices made up by Nadel himself. Defendants thus created the false impression that there was a liquid market for these securities and that the market prices for the securities were consistent with the inflated values that Defendants reported to their clients.

The SEC’s case was investigated by Alison T. Conn and Maureen P. King of NYRO with the assistance of Michael Fioribello and Debbie Chan after a joint examinationby the broker-dealer examination staff conducted by Linda Lettieri, Jeffrey Berfond and Margaret Lett and the investment adviser examination staff conducted by Joseph P. DiMaria, James E. Anastasia, Steven P. Gilchrist and Julianne M. Lieberman.

The SEC’s litigation effort will be led by Richard G. Primoff and Maureen P. King.